On The Fly: Weekly technical notes for S&P 500

Earnings season in some respects appears to have done nothing much to change the outlook for the S&P 500 (SPX) index. Price reactions have been muted overall, suggesting that news and outlook had been largely priced in. There were, of course, notable exceptions. But as the fates would have it, the problem of sectors not working in unison has come back into play as a factor in the lack of direction and conviction. Energy (XLE) was notably down over the week as were Consumer Staples (XLP) and Utilities (XLU). That would suggest that there was an embrace of more risk-taking, that is if it weren't earnings season. Technology (XLK) and Materials (XLB) meanwhile outperformed. The remaining sectors were closer to "UNCH" or marginally better. In sum, the net result for the S&P 500 was a very small gain. This lack of movement is going to leave neither the bull or bear camp much to immediately work with or at advantage. There is still an extremely full calendar for earnings over the next week. And then we slow into the late summer with earnings in the rear view. What catalysts we get after Cisco (CSCO) reports later in August are going to be technical, economic, and news-driven. One thing to watch for is that the bulls may become nervous if the indexes don't soon push through on the upside. But the bears have been burnt enough times now that there may be less enthusiasm to sell. The tape is likely, as earnings fade, to be driven by position management and possible reallocation. The levels remain fixed at taking out 2180 as an objective on the upside with a probable push to 2200 thereafter. For the bears, the old highs at the 2130 area would need to be voided strongly to have any real impact.